Ridley Corporation (ASX: RIC) banks on business expansion to unfold growth potential

4 min read | February 14, 2024 03:03 PM AEDT | By Team Kalkine Media

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Ridley Corporation (ASX: RIC) banks on business expansion to unfold growth potential — Image source: Explode, Shutterstock.com

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Highlights

Ridley Corporation manufactures animal nutrition solutions

In FY23, RIC’s revenue increased by 20.2% YoY to AUD 1,260.53 million

AGR Agricultural Investments L.L.C. has maximum stake in RIC with a shareholding of nearly 19.01%

Ridley Corporation Limited (ASX:RIC) specializes in the manufacturing of animal nutrition solutions. The company operates through two segments: packaged feeds and ingredients, and bulk stockfeed. Ridley's product categories cover a range of packaged products.

In the financial year 2023 (FY23), the company reported over 20.2% YoY rise in revenue to AUD 1,260.53 million and 12% YoY increase in EBITDA to AUD 89.67 million. Net income during the reported period fell by 1.4% to AUD 41.83 million.

Top 10 shareholders of RIC

The top 10 shareholders of RIC have around 39.64% shareholding in the company. The highest stake in RIC is held by AGR Agricultural Investments L.L.C., with a shareholding of nearly 19.01%.

1HFY24 trading update

Today (14 February 2024), the company released its first half year results for FY24. During the reported period, the company witnessed an 8.8% YoY growth in underlying EBITDA to AUD 48 million and a 9.1% YoY increase in underlying NPAT to AUD 22.8 million. The earnings growth was driven by volume and margin growth in bulk stockfeed and higher volume in packaged feed and ingredients segment.

The operating cash inflow reached AUD 35.1 million during the reported period, driven by short-term working capital requirements.

Outlook

The company expects macro-conditions to present challenges in the short term, and to address the same, steps are being taken.

In the second half, RIC anticipates ongoing earnings growth from premiumization in the packaged, feed and ingredients segment. The earnings growth is likely to be driven by the targeted acquisition of OMP and maximizing scale benefits in the bulk stockfeed segment.

Growing demand for protein in pet and human food and feedstock for renewable fuels is anticipated to boost product demand.

Growth plans

The company intends to expand globally by targeting aqua culture customers and selling companion animal products. The goal is to improve the quality of rendered products and trading tallow and protein meal.

The company plans to launch new products, expand regionally and attract new customers while retaining the existing ones.

Moreover, the company aims to optimize the supply chain by efficient use of raw materials and direct sourcing of ingredients.

Share performance of RIC

RIC shares closed 5.97% lower at AUD 2.52 apiece on 14 February 2024. With this, RIC’s share price has surged by almost 33% in the past one year and has increased by 11.89% in the past three months.

The 52-week high of RIC is AUD 2.86, recorded on 30 January 2024, while the 52-week low is AUD 1.855, recorded on 8 June 2023.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 14 February 2024. The reference data in this report has been partly sourced from EODHD/Others.

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